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This article will reflect on the compensation paid to Chip Childs who has served as CEO of SkyWest, Inc. (NASDAQ:SKYW) since 2016. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
How Does Total Compensation For Chip Childs Compare With Other Companies In The Industry?
Our data indicates that SkyWest, Inc. has a market capitalization of US$1.8b, and total annual CEO compensation was reported as US$3.6m for the year to December 2019. That's a modest increase of 8.0% on the prior year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$500k.
In comparison with other companies in the industry with market capitalizations ranging from US$1.0b to US$3.2b, the reported median CEO total compensation was US$3.1m. From this we gather that Chip Childs is paid around the median for CEOs in the industry. Moreover, Chip Childs also holds US$4.9m worth of SkyWest stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, around 14% of total compensation represents salary and 86% is other remuneration. Although there is a difference in how total compensation is set, SkyWest more or less reflects the market in terms of setting the salary. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
A Look at SkyWest, Inc.'s Growth Numbers
SkyWest, Inc.'s earnings per share (EPS) grew 19% per year over the last three years. In the last year, its revenue is down 17%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. While it would be good to see revenue growth, profits matter more in the end. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has SkyWest, Inc. Been A Good Investment?
SkyWest, Inc. has generated a total shareholder return of 1.0% over three years, so most shareholders wouldn't be too disappointed. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
As previously discussed, Chip is compensated close to the median for companies of its size, and which belong to the same industry. However, it's admirable that over the last three years, EPS growth for the company has been impressive, though the same can't be said for investor returns. As a result of these considerations, we would suggest the compensation is reasonable, but looking ahead shareholders will likely want to see healthier returns.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 3 warning signs for SkyWest (1 shouldn't be ignored!) that you should be aware of before investing here.
Switching gears from SkyWest, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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